[Editorial] The Korean Economy Cannot Be Revived Using Roh Administration Methods

Domestic and overseas economic research institutes predict Korea’s economic growth next year will be around four percent.

If things remain on track, the Roh Moo-hyun administration will become the first administration to fall short of its target potential growth rate for all five years of its term. The victims, of course, are the people themselves. Young men and women who can’t find employment, office workers suffering under dwindling paychecks and mounting taxes, the self-employed who are closing the doors of their businesses one by one due to paltry sales…the list goes on and on.

In its report on the Korean economy on October 5, the OECD warned that Korea may become mired in a low-growth trap before it reaches the per-capita income level of advanced nations. Bruce Klingner, an Asian analyst with the international political consulting firm Eurasia Group, remarked, “Korea has become a ship without a rudder because of President Roh’s insufficient political power and high-risk political tactics.” He argued, “Korea may even be hit with a long-term recession in the manner of Japan.”

The OECD’s report pointed to areas which have become worse since the launching of the Roh administration, such as corporate policy, labor-management relations, and educational competitiveness. This observation does not differ from the views offered by domestic experts and the media over the years. The Roh administration has been negligent in their effort to vitalize the civilian economy and cement its potential for growth. It constrained investment via metropolitan regulations and investment caps on the pretext of ensuring fairness and balance. The ensuing result was an accelerated outflow of overseas companies from Korea.

Moreover, the Roh administration reinforced its anachronistic control over the universities, rather than giving them autonomy. The fact that Korea’s labor productivity is a mere 40 percent of that of the U.S. is not unrelated to the failure of the administration’s labor policy.

Amazingly, the government is continuing on a course that adds to the nation’s financial deficit and debts despite having squeezed out an inordinate amount of taxes. The OECD advised that the financial balance must be restored by 2009 if Korea is to cope with impending problems like rapid population aging, but the prospects are hardly bright at present.

In addition, the OECD counseled that the investment cap should be removed in gradual stages and more attention paid to enhancing national productivity than on regional development. It did not forget to demand that the labor market be made more flexible by alleviating the standards governing the employment and termination of regular employees. The government must realize that if it does not work to achieve such changes, there can be no growth, distribution, or welfare for the nation.